An asset purchase agreement is a contract in which a buyer (person or entity) agrees to purchase assets from the seller (a person or entity) for a stated price. Asset purchase agreements are usually used when one business wants to purchase some but not all of the assets of another business, and when the buyer might be concerned about taking on liabilities associated with the selling company. These are a couple of ways in which an asset purchase agreement is different from a merger agreement in which two or more companies merge to create a new combined organization, or an acquisition agreement in which the buying company acquires the selling company in its entirety.
In Texas, an asset purchase agreement (APA) is a legal document that outlines the terms and conditions under which one party (the buyer) agrees to purchase assets from another party (the seller). Unlike a merger or acquisition agreement, an APA typically involves the sale of specific assets rather than the entire company, allowing the buyer to avoid assuming the seller's liabilities unless expressly agreed upon. The assets may include tangible assets like equipment and inventory, as well as intangible assets such as intellectual property and customer lists. The APA will detail the assets being sold, the purchase price, representations and warranties, conditions to closing, and other relevant terms. It is important for both parties to conduct due diligence and clearly define which assets and liabilities are being transferred to avoid future disputes. Texas law requires that certain formalities be observed for the sale of particular types of assets, such as real estate, which must be in writing to be enforceable under the statute of frauds. Additionally, the Uniform Commercial Code (UCC), as adopted in Texas, may govern the sale of personal property and dictate specific requirements for the sale to be valid.
